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Independence Contract Drilling to pay down term loan with convertibles
By Rebecca Melvin
Concord, N.H., March 18 – Independence Contract Drilling Inc. plans to repay amounts drawn under its existing term loan using some proceeds from $157.5 million floating-rate convertible senior secured PIK toggle notes due 2026, according to a company news release.
The privately placed convertibles were sold to affiliates of MSD Partners LP and Glendon Capital Management LP.
Remaining proceeds will be used to pay final merger consideration to the prior equity holders of Sidewinder Drilling LLC, to fund capital expenditures for future rig reactivations and for general working capital purposes.
There is an uncommitted right to sell an additional $7.5 million of the notes, which mature March 18, 2026.
The convertibles bear interest at SOFR plus 1,250 basis points. There is an option for payment in kind for 18 months at an initial rate of SOFR plus 1,400 bps and, following stockholder approval, the right to PIK interest for the entire term of the notes at a reduced interest rate of SOFR plus 950 bps.
The company has the right to redeem up to $50 million of notes during the 18 months following the issue date using proceeds of common stock sales.
In connection with the issuance of notes, the company has agreed to increase the size of its board of directors from five to seven. Four of the company’s existing directors will remain, while the noteholders will appoint two directors, and those two designees will be entitled to designate the third director, subject to review and approval by the company’s nominating and governance committee.
Piper Sandler & Co. served as financial advisor to the company, and Sidley Austin LLP served as legal advisor on the transaction.
A conference call for investors will be held at 10:30 a.m. ET on March 21. The call can be accessed live by calling 855 239-3115 or, for international callers, 412 542-4125.
The oil and gas drilling services company is based in Houston.
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